As mentioned above, an LLC family is a useful tool to protect family assets from creditors` claims. Each member`s financial contribution limits their liability for the LLC`s debt. The enterprise contract may prohibit members from withdrawing and recovering their shares in the company, which can then be claimed by creditors. This structure also provides a wealth and estate planning mechanism for families who do not have active businesses. In this case, the family estate is transferred to the LLC for management. If used correctly, they can help families manage assets and avoid estates, inheritance taxes and lifetime gift taxes to family members. An LLC family is formed by a family member who acts as an executive member. The LLC family operating contract defines and limits the rights of ownership, functional decision-making and capital transfer. An LLC family may be incorporated for legal purposes, such as real estate or brokerage account management. However, a family LLC cannot be used to manage a personal residence. A carefully crafted enterprise agreement is even more important for family LCs, because they tend to be scrutinized more closely to ensure that the unit and the people they own are separated – that they are not just tax housing.
The enterprise agreement can help to demonstrate that the business is a separate and independent entity and that its owners, family members, do not use it as an instrument of tax evasion. If you want to keep the “family” in the family business, consider taking care of the business first so that the family can take care of each other later. Without confusion as to who calls what shots, who receives how much of the profits and who receives the business later, your family business may experience less conflict and more friendliness. Legal fees can range from $3,000 to more than $10,000 depending on complexity. Other expenses that an LLC family can expect include annual meeting fees and tax filing and filing fees, which must be made on a quarterly basis. To learn more about LLC Operating Agreements, visit www.delawareinc.com/blog/101-on-an-llc-agreement/ This is just one way to structure a Delaware LLC to move a family business from one generation to the next. A Delaware LLC can be very flexible when it comes to getting ownership in the family business you`ve worked so. An LLC family is generally expensive to do and maintain and requires legal assistance who has experience in starting a family business. Of course, even if it is not necessary, it is always a plus, so the lawyer is also familiar with the type of business that the family owns. There are two main reasons for the creation of family LCS: running a business or real estate planning.
Like other businesses, family businesses can use the limited liability and flexibility of LCs by structuring their businesses. A mature family business or business with diffuse ownership interests should consider including a drag-along rights provision. As a general rule, the rights of a majority of owners allow minority owners to participate in the sale of the business on terms negotiated by the majority, which prevents minority stakes from obstructing an otherwise attractive sale transaction.